Compliance procedures are essential for minimizing fraud risks, such as money laundering, terrorist financing, or identity theft. Artificial Intelligence (AI) has advanced so fast that its astonishing technological capabilities are now replacing compliance professionals. Especially with start-ups and the Fintech industry, it’s common to use automated, real-time, AI-driven digital solutions to detect crime more efficiently.
The regulations are growing, and cybersecurity compliance is more crucial than ever. By law, Know Your Customer (KYC) is required to establish the legitimacy of a client’s identity and determine the risk factors. Apart from data breaches, non-compliance leaves companies at risk of fines and penalties, lawsuits, loss of reputation as well as possible jail time.
According to Anti-Money Laundering (AML) and KYC fines report by Kyckr, during the first half of 2021, 80 banks were fined an estimated $2.7 billion for avoiding regulations. On top of the list was AmBank, a Malaysian bank, which had a $700 million dollar settlement due to the former prime minister’s corruption scandal.
The pressure to close security loopholes continues to expose not only illegal activities among politicians but also other high-profile and high-net-worth individuals who are continuing to open the door to tax avoidance and similar compliance-wise gray-area activities. That’s why the objective of KYC guidelines is to prevent banks and other institutions from being used for crime and help them manage fraud risks more efficiently.
Compliance isn’t a one-and-done job. For instance, real-time database monitoring, such as the Dark Web or the stolen cards list, helps businesses to be aware of any suspicious customer behavior in real-time. According to Domantas Ciulde, the CEO of iDenfy, the startup that provides four-step identity verification, fraud prevention, and compliance services, you can mitigate fraud risks easier with AI-powered tools to ensure accuracy and avoid human error. “Paper-like methods don’t stand a chance in today’s fast-paced environment.” — he adds.
As a result, the company focuses on perfecting its KYC expertise, and to this day, it is best known for the fully automated identity verification engine, which supports 2 700 documents from around the world. iDenfy ensures compliance and accurately detects suspicious activity. Due to the enhanced ID verification, the onboarding process becomes smoother, especially with the help of AI; institutions can skip frustrating processes and lessen the operational burden of KYC procedures.
Cogito provides annotation and labeling services for machine learning and computer vision, allowing other businesses to build a high-quality AI model. With the goal of supporting the development of this game-changing technology, the business is responsible for real-time KYC services to AI-enabled companies and agrees with the technology-based tactics. According to Cogito, more companies leave traditional security measures and switch to cost-effective, speedy AI solutions.
The “Identity Verification” report by Market and Markets exposes a trend in the identity verification industry, explaining that it will potentially grow from $8.6 billion to $18.6 billion by 2026. The study further indicates that one of the main components leading to this change is the Work From Home model and retail businesses having the chance to establish a broader market online. This shows that automated, AI-powered solutions aren’t a futuristic vision but rather a mainstream tool for many sectors.
“Without technology-dependent solutions, companies take on a risky approach and rely on inefficient manual methods. AI-supported AML and KYC solutions allow enterprises to make more informed, safe decisions about who they prefer to do business with, as well as close the door on risky customers. On top of that, artificial intelligence helps understand the ever-changing regulatory environment.” — said Rohan Agrawal, CEO, and Co-Founder at Cogito.
Compliance specialists who grasp the intelligent use of artificial intelligence and crucial data in internal and external reporting procedures will be essential assets to any company. Those forward-thinking professionals will put in place technologies that automate dull, repetitive chores like standardized, straightforward data.